DroneShield Ltd (ASX: DRO) shares are charging higher on Tuesday morning.
At the time of writing, the counter drone technology company's shares are up 5% to $1.21.
This follows the release of a blockbuster first quarter update, headlined by record revenue and a growing backlog of committed orders that appears to be setting the stage for another bumper year.
According to the release, for the three months ended 31 March, DroneShield reported first-quarter revenue of $33.5 million, up a whopping 102% on the prior corresponding period. This is now officially the company's strongest revenue quarter ever, overtaking its previous high of $27.7 million in the third quarter of FY 2023.
In addition, the company is already sitting on $94.4 million of revenue either received or locked in via purchase orders for the 2025 financial year. That's well ahead of the $57.5 million achieved in all of FY 2024 — and we're only in April. Any contracts won from this point will be on top of that figure.
Cash receipts hit $16.7 million, up 135% year-on-year. The gap between revenue and receipts is largely attributed to billing cycles.
Importantly, recurring software revenue is ramping up, with DroneShield's SaaS revenue jumping 198% to $1.67 million in the quarter. Management expects this to increase even further in 2026 as it releases next-generation AI-driven platforms and shifts more of its defence customers to subscription-based software models.
Another standout of this update is the company's cash position — a healthy $197 million and no debt. Management notes that this gives DroneShield the flexibility to invest in R&D, acquisitions, global expansion, and the growing cost base that comes with scaling a defence tech business.
Even with operating expenses of around $6.5 million per month, the company is comfortably positioned to weather volatility, fund product development, and meet surging demand.
Speaking of demand.
DroneShield revealed that its sales pipeline now totals $1.6 billion in visible opportunities across 2025 and 2026.
That's a massive step up from prior years and reflects surging global demand for counter-drone (C-UxS) technology, particularly across Europe, Asia, and the US.
It notes that in Europe, which contributes 24% of year to date revenue, increased EU defence spending, a EUR800 billion "ReArm Europe" initiative, and ongoing demand from Ukraine are all fuelling orders. The company is eyeing a dedicated European manufacturing hub to support growth.
In Asia, which represents 23% of year to date revenue, tensions in the region, especially around China, have seen defence budgets spike and two large contracts (worth $43.8 million combined) have been secured already this year.
Finally, in the United States, which represents 22% of year to date revenue, its defence budget now tops US$1 trillion, with drones and anti-drone tech named as priority areas. And while tariffs may present headwinds, management believes that DroneShield's highly differentiated solutions will maintain demand.
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